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Wanda City’s

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’80s, con­sumers did about 10 per­cent of their spend­ing on goods in depart­ment stores, ex­clud­ing au­tos, gas, and restau­rants, ac­cord­ing to John­son. The es­ti­mate for 2016 is 1.7 per­cent.

That’s quite a turn­about for Sears, which rose from be­ing a watch mer­chant in the late 1800s to Amer­ica’s pow­er­house re­tailer by the mid­dle of the 20th cen­tury. In the 1980s it ex­panded its quest to be all things to all peo­ple, buy­ing Cold­well Banker and Dean Wit­ter Reynolds and in­tro­duc­ing the Dis­cover credit card. But the ’90s were a time of up­heaval, with Sears pulling back from fi­nan­cial ser­vices and push­ing hard to com­pete in cloth­ing. To that end, it pur­chased Lands’ End in 2002 for $1.9 bil­lion.

It was in that pe­riod that Sears be­gan to move away from its blue-col­lar base, says Can­dace Cor­lett, pres­i­dent of con­sult­ing firm WSL Strate­gic Re­tail. “They wanted a bet­ter cus­tomer,” she says. “Fre­quently, when re­tail goes off the rails, it has to do with not lik­ing the shop­per you have.”

Em­blem­atic of that ef­fort, she says, was its 1990s Cir­cle of Beauty brand of higher- end cos­met­ics that “were about three steps above the Sears shop­per.” In the mean­time, “the com­pet­i­tive mix was capturing the shop­per that Sears didn’t want any­more.”

Sears Hold­ings ne­glected to spend on its stores, which still ac­count for the over­whelm­ing por­tion of sales for mer­chants even in the in­ter­net age. Chief ex­ec­u­tives and

other se­nior man­agers cy­cled quickly through the com­pany, with Lam­pert him­self be­com­ing chief ex­ec­u­tive of­fi­cer in 2013—in ad­di­tion to his roles as chair­man, lender, and largest share­holder. “The pre­sump­tion when he bought it was that he was buy­ing it for the real es­tate,” Cor­lett says. “I don’t think any­one but Ed­die Lam­pert thought he was go­ing to be a suc­cess­ful mer­chant.”

Ever­core’s Mcgin­ley says he re­mem­bers pag­ing through a 2005 pre­sen­ta­tion where the com­pany laid out its plans for cost- cut­ting and sav­ings through the merger, in­clud­ing dra­matic de­clines in store up­keep and ad­ver­tis­ing. “The stores de­graded at a pretty fast pace,” he says. “It ex­ac­er­bated the broader is­sues Sears and Kmart had with rel­e­vance right out of the gate.” At the same time, com­pa­nies such as Tar­get and Home De­pot were ex­pand­ing, open­ing stores away from malls in lo­ca­tions that were often more con­ve­nient to shop­pers.

Sears tried to adapt in other ways. It ex­per­i­mented with var­i­ous store for­mats, in­clud­ing a failed pro­gram to con­vert hun­dreds of Kmart out­lets to a one- stop for­mat called Sears Essen­tials. The com­pany has in­vested heav­ily in its dig­i­tal op­er­a­tions, of­fer­ing often in­no­va­tive fea­tures such as on­line or­der­ing for driv­ethrough pickup. It’s sub­let space in some of its stores to other re­tail­ers, in­clud­ing re­tailer with smaller and fewer stores. Sears Hold­ings had 1,672 stores on Jan. 30, vs. al­most 3,500 at the time of the merger.

“Leaner, meaner, but with no rea­son to walk through the door,” Cor­lett says. “They don’t have any rea­son for be­ing any­more. They’re to­tally re­dun­dant,” and oth­ers do the work bet­ter.

Still, John­son thinks Sears can sur­vive as a smaller chain fo­cused on ap­pli­ances—long a strength—de­spite the height­ened com­pe­ti­tion from on­line sell­ers and brick-and-mor­tar chains such as Best Buy, Home De­pot, and Lowe’s. “There’s a ‘there’ there,” says John­son. “But it’s not go­ing to be easy to get to.” �Lau­ren

fi­nan­cial­fi­nan ser­vices. Buys Cold­well BankerBank real es­tate bro­ker­age.brok

Launches the Disc Dis­cover Card.

Closes its unpr un­prof­itable gen­eral cata cat­a­log busi­ness. Laun Launches an I IPO of 20 per­cent of Dea Dean Wit­ter; give gives re­main­der to s share­hold­ers, in w what is then $850m Sears trans­ferred con­trol of the Sears Tower in Chicago to cred­i­tors in 1994, wip­ing out this amount of debt Her­shey cuts down on the sugar The bot­tom line Sears built Ken­more, Diehard, and Crafts­man into some of Amer­ica’s choic­est brands. Now it’s con­sid­er­ing sell­ing all three.

ri­val that of the U.S. af­ter the new venues open, pre­dicts in­dus­try con­sul­tant Ae­com, grow­ing from 120 million vis­i­tors last year to 220 million an­nu­ally by 2020. “Main­land Chi­nese con­sumers have up­graded a lot in their be­hav­ior in the last 10 years,” says Jen­nifer So, a tourism an­a­lyst at China Se­cu­ri­ties In­ter­na­tional. “They want ex­pe­ri­ences, not just shop­ping. That’s why so many theme park op­er­a­tors see op­por­tu­ni­ties there.”

Next year, Dreamworks An­i­ma­tion plans to open its $2.4 bil­lion Dream­cen­ter in Shanghai, and Haichang Ocean Park Hold­ings will un­veil China’s big­gest ma­rine park. Six Flags En­ter­tain­ment is due to open a park in China, its first out­side North Amer­ica, in 2019. “In the end, the suc­cess­ful ones will be those who know how to op­er­ate theme parks, not just de­velop them,” So says.

Dis­ney and Six Flags, which have long run theme parks in the U.S., have an edge when it comes to ex­pe­ri­ence. Chi­nese op­er­a­tors counter that they have a su­pe­rior un­der­stand­ing of local con­di­tions and of­fer bet­ter value for the money. They also may en­joy a po­lit­i­cal ad­van­tage. At China’s an­nual po­lit­i­cal meet­ings this year, Li Xiu­song, An­hui prov­ince’s rep­re­sen­ta­tive to the Chi­nese Peo­ple’s Po­lit­i­cal Con­sul­ta­tive Con­fer­ence, said China shouldn’t al­low too many Dis­ney parks be­cause do­ing so would make chil­dren in­dif­fer­ent to Chi­nese cul­ture. He rec­om­mended that parks and at­trac­tions be based on Chi­nese lit­er­ary clas­sics.

One of the coun­try’s most suc­cess­ful op­er­a­tors is Songcheng Per­for­mance De­vel­op­ment, whose seven theme parks fea­ture live the­atri­cal shows in­cor­po­rat­ing indige­nous cul­ture. It climbed to No. 10 in Ae­com’s rank­ing of top theme park groups world­wide last year, with 22 million vis­i­tors, a 53 per­cent jump from a year ear­lier.

“The key for theme park suc­cess to­day is brand pop­u­lar­ity,” says John Gerner, an in­dus­try con­sul­tant. “That brand might be unique as­pects of the local area and its his­tory, but is in­creas­ingly a well-known in­tel­lec­tual prop­erty.” Chi­nese de­vel­op­ers should li­cense pop­u­lar char­ac­ters or de­velop some of their own, he says.

Some are do­ing that. Haichang Ocean Park has used char­ac­ters from the hit Chi­nese film The Mer­maid to pro­mote its Shanghai Haichang Po­lar Ocean Park. Still, the pull of pop­u­lar Western en­ter­tain­ment is dif­fi­cult to ig­nore. At open­ing, per­form­ers were dressed as Snow White and Cap­tain Amer­ica— both Dis­ney char­ac­ters—and some stuffed an­i­mals for sale re­sem­bled Dreamworks’ Kung Fu Panda.

Dis­ney said on May 30 that it’s pre­pared to ad­dress any in­fringe­ment of its in­tel­lec­tual-prop­erty rights. On May 31, Wanda said Dis­ney char­ac­ters ap­peared in some stores in Wanda’s re­tail mall that’s part of the Wanda City com­plex, but not in­side the tick­eted theme park area. “The non-wanda char­ac­ters were op­er­ated by in­di­vid­ual stores within Wanda Mall,” Wanda said in a state­ment in re­sponse to Bloomberg queries. “They do not rep­re­sent Wanda.”

Since it could take decades for Chi­nese com­pa­nies to de­velop fresh char­ac­ters to lure park­go­ers, says an­a­lyst So, local op­er­a­tors could ben­e­fit more in the near term by com­pet­ing on value. “A park like Haichang is not ex­pen­sive, and peo­ple can visit it often,” she says. “But Dis­ney­land is ex­pen­sive and would be some­thing peo­ple go to only once ev­ery few years.”

Shanghai Dis­ney will boost the broader amuse­ment park in­dus­try, much as Hol­ly­wood films spurred movie-watch­ing among Chi­nese, says Michel Brekel­mans, co-head of L.E.K. Con­sult­ing’s China prac­tice. Now, China’s box of­fice is poised to over­take North Amer­ica’s. “I ac­tu­ally think Dis­ney­land will help the local play­ers strengthen the theme park cul­ture in China,” Brekel­mans says. “Be­cause of its strong brand, peo­ple who might not oth­er­wise go to theme parks will go and be ex­posed to the con­cept.” �Rachel Chang, with Emma Dong

The bot­tom line As more theme parks open in China, an­nual at­ten­dance could reach 220 million by 2020, up from 120 million last year.

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